Paraguay Seizes Major Digital Bank
The central bank intervened in Ueno Bank, affecting 3 million customers and $380 million in public pension funds.
By Chioma Kuznetsov ·
Paraguay’s central bank took control of Ueno Bank early Tuesday, freezing the accounts of approximately 3 million customers. The move leaves the savings of nearly 60% of the adult population in administrative limbo while regulators work to stabilize the institution.
The board voted unanimously on Monday to place the lender into resolution. This process allows regulators to move deposits to safer banks before liquidating remaining assets to pay creditors. It differs from a standard court bankruptcy by prioritizing depositors over other creditors.
Ueno manages between $800 million and $850 million in public money. About $380 million of that total comes from the IPS, the state pension and health fund. The fund’s finance manager, Gladys Vera, confirmed that the money for monthly retiree payments is held at a different bank, ensuring payments continue on schedule this month.
The seizure follows a long-standing dispute over President Santiago Peña’s ties to the bank. Peña served as a business partner of Grupo Vázquez, the conglomerate that owns Ueno, until March 2025. He appointed Ueno’s then-chief, Carlos Carvallo, to lead the central bank shortly after his 2023 inauguration. Critics have long called that appointment a conflict of interest, though both the president and the bank deny any wrongdoing.
Carvallo told reporters on Tuesday that regulators initially flagged concerns about loans to companies connected to the bank’s owners. Banks face strict limits on such lending to prevent owners from steering customer funds into their own businesses. He stated that a deeper inspection revealed further irregularities, which the central bank will report to authorities. He also blamed recent news reports for worsening the bank's fragile position.
The central bank appointed officials to take over management, assess the bank's value, and protect its assets. It plans to investigate the causes of the financial decline and impose sanctions. The regulator stated that the issues are confined to Ueno and do not affect the wider financial system.
Depositors are guaranteed up to 228 million Paraguayan guaraníes, or roughly $38,000, from a central bank fund. Banking law requires this payout within 15 days, with one possible 15-day extension. Those with larger balances will depend on the outcome of the liquidation process for any additional recovery.
